Agio

Agio (Ital. aggio, exchange, discount, premium), is a term used in commerce in several slightly different meanings:[1]

The variations from fixed pars or rates of exchange in the currencies of different countries.

The difference in exchange between two currencies in the same country.

If coinage is debased, the real value can be greatly reduced below the nominal value.

Examples

When the government of Maria Theresa decided in 1762 to introduce paper money, the "Bankozettel", it was considered so useful, that an agio of 1-2% was paid on these banknotes against coins. However, increasing emissions of the paper money eroded its value and in 1800 their exchange rate rose to 118 3/8 % against 100 in silver.[2] At first, merchants and others would pay 101 to 102 coins to get Bankozettel in a value of 100 coins. When their value fell, it would take 118 3/8 in paper to get 100 in silver.

England in times of Napoleonic Wars stopped to redeem its banknotes for hard money in 1797, until the resumption in 1815, but the "disagio" was never more than 31%. In 1814 had the Bank of England less than 1/10 of gold compared to the banknotes in circulation, but their agio to gold was only 9%.[2]